Speaker 1: Today, you will see an example of a dispute resolution as an alternative to litigation. Zeus is a small energy company based in the EU member state of Agartha. It is in dispute with Ares, a large energy producer based outside the EU. The dispute concerns Zeus's need for the right to a reduction in the price and volume commitment for gas sold by Ares to Zeus under a long-term gas supply contract entered into between the parties 10 years ago. Zeus has attempted to vary its commitments under the contract by requesting a periodic revision to the price formula to take account of the major changes in energy markets. Ares has stated its intention to issue proceedings against Zeus, claiming 50 million euros relating to Zeus's failure to meet the take-or-pay contractual obligation under the supply contract. Zeus maintains that Ares' insistence on the original terms of the contract is anti-competitive and has stated that it will make a complaint to the competition authorities if Ares does not come to the negotiating table. Barbara is head of sales at Zeus and knows that her job will be on the line if the matter is not resolved without delay. Enrico is Zeus's external counsel and a senior associate at Amicable Law. It was he who suggested the mediation. Kevin is the commercial director at Ares. He is a hard-nosed negotiator and has only agreed to mediation to make clear his position. He knows very little about the process. He is represented by Nadia, the external lawyer for Ares and a partner from Sue Law. She is sceptical of the benefits but has agreed to represent her client at the mediation. The parties have chosen Martha to act as their mediator. She has a wide range of experience of handling complex commercial disputes with a focus on regulated industries. We join them as Barbara, Enrico, Kevin and Nadia start the joint meeting with Martha.

Speaker 2: Welcome, good morning and thank you all for instructing me to be your mediator today. As we've already talked about in the private sessions, the purpose of getting everybody together this morning in this joint meeting is to make sure that you're all clear about the structure of today and how it will pan out. In a moment, I'll invite each team to make an opening statement. I'll ask the lawyers to do that and the purpose of that is to establish exactly what's important to you and what you'd like to achieve in today's session.

Speaker 3: It's pretty straightforward. CS owes money and are now seeking to get out of the deal. A deal is a deal.

Speaker 2: So you all know each other, you're familiar, so let's dispense with formalities. You've said to me privately that you're happy to use first names. I take it everybody is still okay with that? Needless to say, you can call me Martha.

Speaker 3: Can we get a move on here?

Speaker 2: So you know I'm a lawyer and an economist, but those roles really do not matter today. My role here is to act as a facilitator to help you...

Speaker 1: Martha then explains the process to the parties and reminds them of some of the key principles of mediation before asking each side to summarise their opening position.

Speaker 2: Would you like to raise now or are we clear about how things will pan out? No, no, that's clear. Thank you for the explanation. So Enrico, it's over to you.

Speaker 4: Thank you very much, Martha, and thank you to Ares for being here today. We know it's a long and complicated story, but Barbara and I have worked in preparation for today to try and reduce it to some basic points that we would like to discuss with you. Of course, our starting point is the contract that we've had together for over a decade now and Ares' refusal to negotiate that contract as provided for under Clause 12. We believe at Zeus that the market has changed significantly since the signature of the contract. The price of gas in the market has changed and the insistence on us purchasing gas at the price of the contract from 10 years ago is now causing us to lose money on all of our downstream customer deals and the reality is that's causing huge emotional distress to the company and possibly, ultimately, insolvency. Oh, please give it a rest. I know, but look, you've even threatened to sue us now if we don't take the gas under the conditions of the contract and it's a commitment that was made over 10 years ago. We would say we have a valid counterclaim that insistence on those volumes being paid for at those prices is not only a breach of contract, but it's actually unlawful under competition law. That competition law claim is based on unfair and excessive wholesale gas pricing and we say that your price currently bears no resemblance whatsoever to what's going on in the market now. There's been a huge upheaval and you know that. We would also add that there is a sense of discrimination against Zeus by Ares. We know your biggest customer in our garther is Hermes. We know that you have a preferential deal with them and we don't think that's right and we say that... It's pure speculation. You've got no evidence to say that about us and Hermes whatsoever. We do and we think the agreement that you have with them is anti-competitive and as such can be challenging. There's only a couple of other things. I know that you find these difficult to hear, but we say that you have a special responsibility. Ultimately we're a smaller company than Ares and as such you have a responsibility to us to negotiate in good faith and to do so promptly. So Martha, we today would ideally like to achieve simply our contractual entitlement. It's very simple. That we have a good faith adjustment of price and in volume commitments.

Speaker 2: Thank you. Thank you Enrico. That's very clear. Nadia, I'll now invite you to speak.

Speaker 5: I'll keep my submissions brief. Ares refutes that it is a breach of contract. The renegotiation provisions in the contract provide only for when there is a serious disturbance beyond the control of any party. Whilst there have been changes in the international gas markets, the situation which Zeus finds itself is of its own doing. It is not for Ares to reduce the price or the volume to throw a lifeline to Zeus for its own financial mismanagement.

Speaker 6: Look, I feel I'm a subject to that. I mean, we're a well-run company. We would never have agreed to the volumes or the prices that if we'd not felt that there would be no scope for renegotiation of the contract. That's why we insisted on reopeners.

Speaker 5: We're here today to state our case and if we cannot resolve the matter, we will not hesitate to issue proceedings against Zeus, claiming the sums due under the take-or-pay obligation. We have a watertight case on the competition issues. There is no evidence that Ares is dominant. Its market share is not approaching 40% in any relevant market. Even if it were dominant, which we deny, there are no final findings by a competition authority that is an abuse of dominance to insist on contractual rights under a take-or-pay contract. And as to the allegation of anti-competitive agreements with Hermes, that is an arm's-length relationship. There is no collusion.

Speaker 2: Thank you, Nadia. Again, that's very helpful. I think now it's perhaps a convenient time for everyone to take a break and I'll meet with Zeus shortly in private session.

Speaker 1: Private discussions continued throughout the day over what appeared initially to be irreconcilable positions.

Speaker 3: They agreed to a deal and now they're seeking to get away with it. You know, as far as I'm concerned, a deal is a deal.

Speaker 6: So, you can see that they're playing hardball, but I'm not surprised, really. I mean, I know that another of other supply companies are looking for a re-opener, so I think I'm going to tuck it out. I think that's the best way forward.

Speaker 3: You tell me this competition argument's a balance, but, you know, I feel like I'm getting screwed here. I'm getting done on here, you know.

Speaker 6: We've had a possible interest from Hyperion on a takeover. And they're not going to want to do a deal with the threat of litigation hanging over us and, you know, a contract that's crippling to our business.

Speaker 3: Unfortunately, unfortunately, you know, there's some documents that have been found that I really wouldn't want to come to light. So, listen, I'm going to go ahead with this mediation, but I'll tell you, I'm really sceptical. I'm going to go ahead with this mediation, but I'll tell you, I'm really sceptical.

Speaker 1: After eight hours, the parties are finally ready for a joint meeting.

Speaker 2: It's late in the day and thank you everybody for your patience in sticking through until now. You've all said you want to get together in a joint session, so here we are. I will hand over to Kevin, really, to get on with what is the business of the day.

Speaker 3: I'll cut to it, OK? We have a final offer to make. We do not believe we are in breach of any of our contractual obligations and your competition arguments have absolutely no leg at all. But we know there's still ten years to go on the contract and we're prepared to adjust our contractual obligations and the contractual formulas for the next three years. We are prepared to agree a 30% volume in reduction and to take pay obligation and a 25% reduction in the price for the next three years, starting the first... We have been backwards and forwards all day on this matter and this is our final offer. This is more than a fair outcome. In return, you will not mention this to anyone and desist from making any complaints against us to third parties in respect of this matter. OK. So, all right, it's not what we believe we're entitled to

Speaker 6: but we're being pragmatic. Now, I've been in touch with our CEO, he's up to speed and we've anticipated this movement. So, we'll accept the terms with the same commitment on confidentiality and the ten million, all inclusive? Yeah, yeah, yeah, that's fine. We'll swallow our legal fees on that.

Speaker 3: So, let me summarise the...

Speaker 6: Martha then summarises the position between the two parties to make sure that they are both clear

Speaker 2: on what is to be agreed.

Speaker 1: So, is there anything else or has that concluded the issues?

Speaker 2: No. That's all. OK, thank you. Thank you.

Speaker 6: No. That's all. That's fine.

Speaker 2: So, I won't ask you to shake on this until everything's reduced to writing. That's fine, Martha.

Speaker 4: I've been working on a draft settlement and I'm sure we can finalise everything this evening. I just need a few more minutes to check the language.

Speaker 2: Right. So, my role here is almost concluded. I'll leave to you to wrap up the paperwork unless there's anything further I can assist with.

Speaker 3: No, that's fine. And thank you for your hard work.

Speaker 6: I'll second that.

Speaker 2: Thank you. Well, the credit must go to all of you and the outcome was in your hands.

Speaker 1: Six months later, Ares and Zeus found that they were shaking hands again. A result that could never have been achieved through litigation. To be continued Ares and Zeus A film by Ares and Zeus A film by Ares and Zeus A film by Ares and Zeus A film by Ares and Zeus A film by Ares and Zeus A film by Ares and Zeus